The 2-3% points in extra cost are worth it if you plan on using as I described above because the use would be for a few  months at most and due to that short term use you can survive a rate adjustment up.But, if you have no plan to payoff the debt like when using for a down payment on a long term hold why pay the extra cost for flexibility and have the additional risk of the adjustable rate with the amortization looming when you can get a fixed rate second mortgage. 

We are seeing a lot of investors have success with this strategy with plans to hold the properties they are rehabbing as rentals for several years before selling.

Suggest you get your game plan in place first then go forward once you have the goal in sight.

What's the plan with the property?

Some other factors to consider - How long are you planning to hold this property?

But if you lay out your plan to the owner over the phone, it's very hard to get a "yes" because trust is developed with a face to face meeting.Trust can be established by talking about your past record (as an investor) but also if you have something positive about yourself (profession - real estate agent, nurse, teacher, fireman, doctor - any profession that can give you some added credentials).#4 Owner vs.

He was stating that to use it as an backdrop to tell people he has a backup plan.

Hey Jacob, do you plan on expanding the portfolio?

@Olga DaiselI think we are lacking some key details of your plan.

We just acquired an existing duplex in Fort Lauderdale and planning on tearing it down and build a new duplex instead.